Which of the Following Questions Is False

question 78

Multiple Choice

Which of the following questions is false?

• A) With perfect capital markets, all securities are fairly priced and issuing securities is a zero-NPV transaction.
• B) The fees associated with the financing of the project are independent of the project's required cash flows and should be ignored when calculating the NPV of the project.
• C) When a firm borrows funds, a mispricing scenario arises if the interest rate charged differs from the rate that is appropriate given the actual risk of the loan.
• D) The WACC, APV, and FTE methods determine the value of an investment incorporating the tax shields associated with leverage.

---

Definitions:

Diversity Jurisdiction

A form of jurisdiction in federal courts when parties are from different states, and the amount in dispute exceeds a specified value.

Principle Place of Business

The primary location where a company's business is performed or managed, often considered in legal jurisdictional issues.

Mediation

A form of alternative dispute resolution where a neutral third party helps disputing parties find a mutually agreeable solution.

Preserve Relationships

An approach or strategy aimed at maintaining positive and sustainable relationships within personal or professional settings.